Interview with Monika Moritz, deputy director of the A-Welle fare association, as well as Luise Rohland, Maurice Rapin and João Silva, members of the FAIRTIQ team overseeing the project.
FAIRTIQ and A-Welle, the fare association in the northern Swiss canton of Aargau and Solothurn, are set to launch the first monthly fare cap market test in Switzerland. As of September 2021, there will be limits on the price that A-Welle customers pay for their monthly public transport use; the cap will also be graduated by zone. The six-month market test should demonstrate that the fare model does not negatively affect a transport provider's bottom line. Rather the cap satisfies two main passenger demands – greater flexibility and cost certainty – and is therefore likely to incentivise both regular and occasional riders to use public transport more.
You will find detailed information on how FAIRTIQ can assist with market test and analyses.
In this interview, the FAIRTIQ team overseeing the project explain the thinking behind the monthly fare cap, while Monika Moritz shares details of the project from A-Welle's perspective, addresses the arguments for and against this pricing model, and what the fare association expects from its joint venture with FAIRTIQ.
If you would like to know the results of this market test, subscribe to our business newsletter.
What is a A-Welle monthly fare cap exactly?
The fare cap limits the amount that A-Welle users pay for their monthly travel. Customers pay for individual tickets as and when they ride until they reach the cap – or maximum amount – set by A-Welle. Above this limit, they travel 'for free'. FAIRTIQ app users already benefit from a daily cap, which means they never pay more for their daily public transport journeys than the price of a one-day travelcard. A-Welle has opted to market test a monthly cap, which limits the total amount that passengers pay for their public transport every month (more details here).
Users enjoy greater flexibility and cost certainty.
How does a capping model affect public transport revenue?
The aim of capping is to make public transport use more flexible. This increased flexibility can enhance the attractiveness of the entire range of services and even bring new customers on board. We also want to motivate existing users to travel more. Surveys have found that greater flexibility has the potential to boost public transport use, which means increased revenues for providers. The data generated from this market test will allow us to determine whether or not fare capping actually stimulates increased public transport use.
What is FAIRTIQ's role in the A-Welle project?
FAIRTIQ is involved every step of the way. First and foremost, the FAIRTIQ app makes it possible to implement this type of post-paid price optimisation. Then, there are our data sets that allow us to generate pretty accurate estimates of the financial impact of the cap and analyse the effects of the monthly cap ex-post. We are also heavily involved in a communication campaign targeted at FAIRTIQ users who travel in the A-Welle fare network.
Interview with Monika Moritz, A-Welle deputy director
FAIRTIQ: A-Welle is set to launch a monthly fare cap in September? Why did your organisation opt for this pricing model?
The A-Welle fare association realised in early 2020 that the pandemic could lead to permanent changes in many aspects of our customers' everyday lives, including their travel behaviour. Although we can see the contours of these emerging trends, the details are lacking. Automatic ticketing technology like FAIRTIQ's allow us to improve our understanding of this 'new mobility' directly, more quickly and without the need for expensive market research.
A-Welle's decision makers, especially the cantons of Aargau and Solothurn, also realised that our fare association and the Swiss public transport industry as a whole have an opportunity here, if not an imperative, to move with these times of upheaval. Gradually, the idea of launching a market test for a limited period of time began to take shape. We refined it, crunched the numbers and implemented it.
Our customers use our services less than they did before. At the same time, their travel behaviour has become more flexible. Many have not renewed their season tickets because they don't think they'll travel enough for it to be financially worthwhile. The unpredictability of their travel needs means that it is more difficult for them to work out the best value ticket. We want to address this need by offering our customers a monthly cap which offers them the flexibility that their everyday life demands. We add up the fares paid by our customers during a given month and work out the cap that best matches their public transport use.
FAIRTIQ: Why did you choose to work with FAIRTIQ?
FAIRTIQ is agile, innovative and extremely knowledgeable about public transport. The speed at which we were able to go from idea to launch is down to our far-sighted decision makers and FAIRTIQ.
FAIRTIQ: What were the arguments for and against the monthly cap?
Our monthly fare cap is targeted quite specifically at monthly season ticket holders who have not renewed their pass since 2020. Our primary goal is to understand how their travel behaviour has changed. Another factor in favour of monthly capping is its pull effect – limiting the price that riders pay for their travel can incentivise them to take public transport more often. Added to this is our use of digital channels to reach our customers, which in turn facilitates the shift to digitalisation. Our season ticket holders rarely use digital travel solutions or our online shops. Our targeted upselling email shots serve two purposes: win back our longstanding season ticket holders and let them know when a monthly season ticket would be financially worthwhile for them again.
One of the most frequent arguments against fare capping we have heard is its cannibalisation effect: customers who are hesitant about renewing their season ticket ultimately decide not to go ahead and switch over to the FAIRTIQ app instead because of maximum price guarantee that the capping model offers. We understand where they are coming from. However, the findings of representative public transport surveys indicate that the risk of this happening is low. Another point to bear in mind is the convenience factor. With a monthly season ticket, all customers have to do is step on and off. With the FAIRTIQ app, they have to check in before they board, otherwise they will not have a valid ticket for their journey. However, I should point out that the app nearly always detects if a user has forgotten to check out and will automatically end the journey for them.
FAIRTIQ: Why do you think that this is the right time to launch a project like this?
Times of upheaval are also an opportunity to change, and we want to make the most of this moment!
FAIRTIQ: What do you expect the monthly fare cap project to achieve?
First and foremost, the market test will generate a wealth of data that will give us greater insight into what our customers want. We will be able to see where they travel to, how, when, with what frequency and with what type of ticket or travelcard, and what these trends mean for our ticket range? It goes without saying that all customer data are, and will continue to be, anonymised!
We also want to find out how former A-Welle travelcard holders behave. Will our cost control guarantee in the app actually prompt them to buy a travelcard again? Will more of our current monthly travelcard holders shift to digital and buy their tickets and passes from our online shop?
Last but not least, the monthly fare cap should help us do our bit for the environment. We hope that the share of road traffic, which has risen steeply since 2020, will fall again and that the cap will drive the modal shift to public transport again. The monthly fare cap should boost public transport use, increase sales and enable A-Welle turnover to recover, which ultimately should ease the financial burden on the public purse.
We will not rely on data alone. We also intend to survey our customers at the end of the market test. We can't wait to find out what they make of the monthly fare cap (the customer journey, communication etc.).